GENIUS Act could bring stablecoin payments to Long Island businesses and consumers

The United States has taken another step toward regulating cryptocurrency, after the Senate on Tuesday passed legislation to regulate a form of crypto called stablecoins that experts hope will open the door to more mainstream adoption of the technology across the country, including on Long Island. 

If passed by the House, the "Guiding and Establishing National Innovation for U.S. Stablecoins," or GENIUS Act, would establish regulations and consumer protections for stablecoins, a type of cryptocurrency usually pegged to the U.S. dollar. 

Sen. Kirsten Gillibrand (D-N.Y.) co-sponsored the bipartisan bill, which ultimately won the support of 18 Democrats, despite some party concerns that the legislation doesn't address President Donald Trump's multimillion-dollar business interests in crypto. 

The bill includes a provision that bans members of Congress and their families from profiting off stablecoins, but not the president and his family, AP has reported.

That's despite significant investment into the space from Trump, whose family owns a notable share of the crypto project World Liberty Financial, which launched its own stablecoin USD1 in March. 

The New York State Department of Financial Services said in an emailed statement that it has worked with Congress for more than three years on the bill, and “looks forward to continuing our work with both houses on this bill.”

Here are four things to know about the GENIUS Act.

What is the GENIUS Act, and what would it change?

The GENIUS Act would establish the first comprehensive federal regulatory framework for stablecoins, a type of cryptocurrency that is pegged to the value of the U.S. dollar, said Danling Jiang, professor of finance and associate dean for programs at Stony Brook University’s College of Business.

“It’s a new kind of market,” she said, pointing out that the government has encountered issues with using other existing frameworks to regulate the digital asset in the past.

The legislation would offer “regulatory clarity,” something that has been holding stablecoins back, said Andrew Rocco, stock strategist at Zacks Investment Research, based in Chicago.

Already, Circle Internet Group, which sells a stablecoin called USDC, has seen stocks soar since the legislation passed the Senate.

Company officials hailed the Senate’s passage of the bill as a “historic moment for the future of money” that will protect consumers and preserve “the strength of the U.S. dollar in the digital age.”

What is stablecoin?

Stablecoin is like a digital token, or a digital dollar, said Jiang, who also co-directs the Center of Entrepreneurial Finance and the Blockchain Business Lab at Stony Brook.

“So when you go to a grocery store, or you go to your hairdresser, you can give them a credit card or cash. So this is more like, you give them the cash,” Jiang said. “You take the stablecoin out of your digital wallet and transfer to their digital wallet by scanning maybe a QR code of their wallet address.”

The idea behind the technology is to allow people to move money instantly, and much more cheaply than with a bank, Rocco said, adding: “It’s going to allow people to move money around the world a lot more efficiently and a lot cheaper, essentially.”

The main factor that has held the technology from becoming mainstream has been the “regulatory red tape, which is being removed,” he said.

Since stablecoins are backed by the U.S. dollar, they’d also help strengthen American currency, Rocco said, noting that tariffs had led to some fear that the global economy would move away from the dollar.

Circulating stablecoins currently have a collective market value of more than $250 billion, according to the Brookings Institution, a public policy nonprofit, with around 99% of those assets pegged to the U.S. dollar.

Some major companies, including Walmart and Amazon, are exploring stablecoin usage, The Wall Street Journal has reported. Neither company immediately responded to a request for comment. 

What does it mean if the legislation is adopted?

The adoption of a federal framework to regulate stablecoins would open the door for the technology to be more widely used, including by vendors like Walmart and Amazon, Jiang said.

Digitally, the transaction would take place immediately, setting it apart from current digital transactions using bank transfers or credit cards, she said. Stablecoin transactions would also not be subject to high transaction fees.

“Say you run a restaurant. You take those payments, you are getting your money on the spot with minimal transaction costs, and nobody can change the record because the record is on the blockchain,” she said.

Blockchain is basically a digital ledger that stores records across a network of computers, according to Investopedia. 

The Merchants Payments Coalition, a national advocacy group, said the GENIUS Act "creates the potential” to disrupt the credit card industry, said Doug Kantor, general counsel for the National Association of Convenience Stores, although the group remains concerned that “by itself, it’s not enough.”

More widespread adoption of stablecoins will “give business owners more options and allow them to make payments more convenient and cheaper for the customers,” he said, reducing the “inflationary pressure credit card payments have on prices today.

It would also allow people to use their phones and other technology to pay for goods and services, rather than carrying around cash or cards, he said.

Bank of America CEO Brian Moynihan said at an investors conference last week that the bank would consider stablecoins after the passage of key legislation. The company declined to comment further. 

JPMorgan Chase has also indicated it would launch a stablecoin-like token in interviews with news outlets and posts on social media. The company declined to comment.

What about Long Island?

Ideally, on Long Island, businesses would start adopting stablecoin as a transaction method, said Craig Rudes, a partner at Long Island Blockchain, a technical consulting firm for blockchain technology.

“I truly believe the best avenue will be in payroll systems,” he said, although he thinks it might take some time for the technology to become widely adopted in the region.

“I’m thrilled to see that this will bring growth to the industry,” he added.

With AP

By Brianne Ledda

brianne.ledda@newsday.com@brianne_ledda

Brianne Ledda covers personal finance and affordability for Newsday. She previously covered Southold and Greenport for The Suffolk Times and is a graduate of Stony Brook University.